Agree Realty Corporation

Good morning and welcome to the AGRI Realty fourth quarter and full year 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ruben Treatman, Director of Corporate Finance. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for AGRI Realty's fourth quarter and full year 2021 earnings call. Before turning the call over to Joey and Peter to discuss our record results for the year, let me first run through the cautionary language. Please note that during this call we will make certain statements that may be considered forward-looking under federal securities law. Our actual results may differ significantly from the matters discussed in any forward-looking statements for a number of reasons, including uncertainty related to the scope, severity, and duration of the COVID-19 pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and the containment measures on us and our tenants. Please see yesterday's earnings release and our SEC filings, including our latest annual report or Form 10-K, for discussion of various risks and uncertainties underlying our forward-looking statements. In addition, we discuss non-GAAP financial measures, including core funds from operations, or core FFO, adjusted funds from operations, or AFFO, and net debt to recurring EBITDA. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our earnings release, website, and SEC filings. I will now turn the call over to Joey.

Thanks, Ruben, and thank you all for joining us this morning. I am pleased to report that 2021 was another terrific year for our growing company. We achieved several notable milestones over the past 12 months, including but not limited to record investment activity of $1.43 billion, surpassing our robust volume in 2020. The addition of 294 properties to our growing portfolio, including six Walmarts, maintaining Walmart as our top tenant at 6.6% of annualized base rent. The completion of our inaugural preferred equity offering with extremely attractive pricing setting a non-PSA REIT record, surpassing $5 billion in equity cap while approaching $7 billion in total enterprise value. And most importantly, the investments in our team and our information technology infrastructure led by our proprietary Arc database have paid tremendous dividends. While our investment volumes were once again at record levels, our continued focus on best-in-class retailers was reinforced by nearly 70 percent of annualized base rents acquired being derived from investment-grade operators. Our disciplined approach is further demonstrated by the ground lease opportunities that we executed on during this past year. We added 93 ground leases to the portfolio, representing nearly 30 percent of annualized base rents acquired, and increasing our ground lease exposure to 14.3 percent of our total portfolio. Several notable ground lease assets were acquired during the year, including our second Wegmans in Persephone, New Jersey, nine long-term Wawa convenience stores, three Walmart and Sam's Clubs, a Lowe's in Ohio, and nearly 20 outlets to dominant power and grocery anchored centers. As a reminder, our ground lease portfolio derives 87% of rents from investment-grade tenants and is largely comprised of the company's preeminent retailers. We closed out the year with a strong fourth quarter, investing $315 million in 70 board properties across our three external growth platforms. Over 67% of annualized base rents acquired during the quarter were were derived from retailers with an investment-grade credit rating, while over 22% of annualized base rents acquired were derived from ground-leased assets. The 71 properties acquired during the fourth quarter were leased to 34 tenants operating in 18 distinct sectors, including general merchandise, home improvement, grocery, off-price retail, convenience stores, tire and auto service, auto parts, farm and rural supply, and dollar stores. The properties were acquired at a weighted average cap rate of 6.1%, and had a weighted average lease term of 10.1 years. We have entered 2022 with the largest pipeline in the history of the company. As disclosed in our December prospectus supplement, included in our pipeline are two portfolio transactions, including the largest portfolio the company has ever pursued. This portfolio is comprised of over 50 properties for an anticipated purchase price of more than $180 million. The first tranche of the transaction has closed and the second tranche is anticipated to close during the first quarter of this year. The portfolio has a weighted average lease term of nearly 10 years and derives approximately 90% of annualized base rent for investment grade retailers. In addition, we are currently under contract on a portfolio of three high performing Walmart 2%ers and a Home Depot store. While these portfolios demonstrate our capability to execute on larger scale transactions, They are incremental to the more granular activity that is characteristic of our traditional acquisition volume. As indicated by our initial guidance of $1.1 to $1.3 billion, we are extremely confident in our team's ability to aggregate high-quality opportunities comprised of leading omnichannel retailers. As mentioned, at year-end, our portfolio's investment-grade exposure stood at 67%, representing a two-year stacked increase of more than 880 basis points. Our focus on best-in-class retailers will continue, as we do not believe it's prudent to move up the risk curve in a dynamic retail environment. Moving on to our development and partner capital solutions platforms, both platforms are seeing increased opportunities of expanding and sizable pipelines. We anticipate both of these platforms to produce outsized activity this year, as we focus on driving incremental value by leveraging all of our real estate capabilities and relationships. While still quite early in the year, I would anticipate commencing between $50 and $100 million through our development and PCS platforms during 2022. For comparison, we had seven development and PCS projects either completed or under construction during 2021 that represented total capital committed of approximately $40 million. Four of those projects were completed during this past year, representing total investment volume of $31 million. Construction continued during the fourth quarter on the company's third project with Gerber Collision in Newport, Ritchie, Florida. The company's first development was 7-Eleven in Saginaw, Michigan, and our second Gerber project in Poober, Georgia. Dispositions during 2021 remained consistent with prior years as we sold 18 properties for total gross proceeds of $58 million. These dispositions were completed at a weighted average cap rate of 6.4%. Notably, we sold six franchise restaurants during the year, reducing the company's franchise restaurant exposure to less than 1% of annualized base rents. Our asset management team remains diligently focused on addressing our upcoming lease maturities. As a result of these efforts, at year end, our 2022 lease maturities stand at just 0.5% of annualized base rents, representing a year-over-year decrease of approximately 80 basis points. During the fourth quarter, we executed new leases, extensions, or options on approximately 256,000 square feet of gross leaseable area. For the full year 2021, we executed new leases, extensions, or options on over 603,000 square feet. Notable new leases, options, or extensions included a new 15-year lease with Gardner White Furniture for the former Art Van flagship store in Canton, Michigan, as well as a new 15-year lease with Burlington in Mount Pleasant, Michigan for the former JCPenney space. As of December 31st, our rapidly growing retail portfolio consisted of 1,404 properties spread across 47 states. This represents an approximately 24% increase in total property count over the course of the year. The portfolio remains nearly fully occupied at 99.5%. As evidenced by our increasing investment grade exposure, our expanding ground lease portfolio, and our minimal near-term lease rollover, our portfolio is better positioned than it has ever been. With a balance sheet to match, I envision 2022 being another significant year for our company. Before I turn the call over to Peter to discuss our financial results, I'd like to highlight the announcement of our new corporate headquarters. As previously announced, we recently closed on the acquisition of a former art van furniture store on Woodward Avenue here in Royal Oak, Michigan. This building offers a unique redevelopment opportunity to create a state-of-the-art space for our growing team. Plans call for additional training in development space, health and wellness facilities, and collaborative meeting areas aligned with our ADC University and ADC wellness initiatives. Construction is anticipated to commence during the second quarter of this year, with a targeted move-in date during the first half of 2023. With that, I'll hand the call over to Peter, and then we can open it up for questions.